Opec may finally turn the production tap on

 
Louisa Bojesen
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IF you aren’t following the oil story, maybe you should be. I mean, sure, you probably know that oil prices are higher, and that you’re paying more at the pumps, but the importance of this Thursday’s meeting of the Organisation of the Petroleum Exporting Countries (Opec) can’t be understated.

Usually, a bunch of oil ministers get together, they talk a bit about output, they talk about supply, and they (mostly) decide not to hike production. But this Opec get-together could be different.

IRAN AND LIBYA MINISTER UNKNOWN
For starters, we’re still not sure who’s going from Iran and Libya. “Why should we care about who is going from Iran?”, you ask. Well, Iran is the second largest oil producer in the Opec cartel, and when Iranian President Mahmoud Ahmadinejad recently declared himself the temporary oil minister of the country, people weren’t happy. (He since retracted the move).

OPEC CONSIDERING RAISING OUTPUT
Apart from the politics of who is going and why, oil ministers find themselves in the midst of a whole lot of volatility. The Arab Spring is here to stay and looks set to have an impact on all countries across the Middle East and North Africa.

There have been production cuts in Libya – gaps in the oil market that Opec hasn’t stepped in to fill – and, given that Opec ministers actually are going to talk about raising oil output for the first time in four years, it seems that they slowly, but surely, are getting ready to respond to an environment of higher oil prices and lower growth.

This is important. Especially as the the International Energy Agency (IEA) seems to be signalling the same readiness to act, given that it recently asked oil producers to boost supplies, something it hardly ever does.

OIL PRICE LIKELY TO MOVE SIDEWAYS
Harry Tchilinguiria, head of commodity markets strategy at BNP Paribas, told me he thinks we’ll move sideways on oil prices for some time as the upside and the downside risks balance each other out. He has an oil price target of $110 per barrel for WTI and $115 per barrel for Brent crude.

Tchilinguiria points out that the particular quality of Libyan oil isn’t easy to replace, and even if the turmoil in that North African nation were to end today, it still would take a long time to assess the damage to the infrastructure, security on the ground, and to work out who the rightful owner of Libyan oil is.

So even if you usually find Opec meetings mind-numbingly boring, pay close attention to this one.

Louisa Bojesen is an anchor for CNBC. Twitter: @louisabojesen